VANNITKUMAR INDERKUIMAR GUPTA, MUMBAI V. JT CIT 12(2), MUMBAI

ITA 2736/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1825 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 04-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Revised return
• Section: 2(14)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , / I.T .A. NO . 2736 / MUM/ 2013 ( / ASSESSMENT YEAR : 20 0 8 - 09 ) SHRI VANIT KUMAR INDERKUMAR GUPTA, 141/144, BASANT APARTMENTS, 101, CUFFE PARADE, COLABA, MUMBAI - 400005 / VS. THE JT.COMMISSIONER OF INCOME TAX - RANGE 12(2), MUMBAI . ( / A PPELLANT ) .. ( / RESPONDENT ) ./ ./PAN : AAFPG5617G / AP PELLANT BY SHRI VIMAL PUNAMIYA / RESPONDENT BY SHRI ABHINAY KUMBHAR / DATE OF HEARING : 29.10 .2015 / DATE OF PRONOUNCEMENT : 16. 12. 2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 01 - 02 - 2013 PASSED BY LD CIT(A) - 23, MUMB AI AND IT RELATES TO THE ASSESSMENT YEAR 2008 - 09. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN REJECTING THE CLAIM OF THE ASSESSEE THAT THE GAIN ARISING ON SALE OF AGRICULTURAL LAND IS EXEMPT U/S 2(14) OF THE ACT. 2. THE FACTS RELATING T O THE ISSUE CITED ABOVE ARE STATED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN IRON & STEEL AND OTHER FERROUS/NON - FERROUS METALS. HE HAS SOLD CERTAIN AGRICULTURAL LANDS DURING ITA NO. 2736/ MUM/ 2013 2 THE YEAR UNDER CONSIDERATION AND EARNED A GAIN OF RS.232. 23 LAKHS. THE ASSESSEE DECLARED THE SAME AS SHORT TERM CAPITAL GAINS IN HIS RETURN OF INCOME. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE REALIZED THAT THE AGRICULTURAL LAND SOLD BY HIM DOES NOT FALL IN THE CATEGORY OF CAPITAL ASS ET AS DEFINED IN SEC. 2(14) OF THE ACT, SINCE THE LAND WAS NOT LOCATED IN A MUNICIPALITY OR WITHIN THE PRESCRIBED DISTANCE FROM THE LIMITS OF MUNICIPALITY. ACCORDINGLY , HE FILED A LETTER DATED 30 - 10 - 2010 REQUESTING THE ASSESSING OFFICER TO TREAT THE GAINS ARISING ON SALE OF AGRICULTURAL LAND AS NOT TAXABLE. THE ASSESSING OFFICER, HOWEVER, DID NOT CONSIDER THE SAME AND COMPLETED THE ASSESSMENT BY ASSESSING THE SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE AS ARISING ON SALE OF SHARES. BEFORE LD CIT(A ), THE ASSESSEE RAISED A GROUND RELATING TO THIS ISSUE. THE LD CIT(A) DIRECTED THE AO TO FURNISH A REMAND REPORT ON THE GROUNDS RAISED AS WELL AS ON THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. THE ASSESSING OFFICER, IN HIS REMAND REPORT, EXPRESSED THE VIEW THAT THE PLEA OF THE ASSESSEE CANNOT BE ACCEPTED, SINCE THE ASSESSEE HAS NOT RAISED THE CLAIM BY FILING REVISED RETURN OF INCOME. THE AO PLACED RELIANCE IN THIS REGARD ON THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF GOETZE (I) LTD. 3. THE LD CIT(A) NOTICED THAT THIS ISSUE HAS BEEN RAISED BEFORE THE AO. BEFORE THE LD CIT(A), THE ASSESSEE FURNISHED A CERTIFICATE OBTAINED FROM REVENUE AUTHORITIES, WHEREIN IT WAS STATED THAT THE AGRICULTURAL LANDS ARE SITUATED 28 KMS AWAY FROM THE MUNI CIPAL LIMITS AND THEY ARE PART OF AGRICULTURAL LAND. HENCE HE PROCEEDED TO ADJUDICATE THIS ISSUE BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASES OF JUTE CORPORATION OF INDIA VS. CIT (187 ITR 688) AND NATIONAL THERMAL P OWER CO. LTD (229 ITR 383). THE LD CIT(A) AGREED THAT THE LANDS SOLD BY THE ASSESSEE ARE AGRICULTURAL LANDS AND THEY SHALL NOT FALL IN THE CATEGORY OF CAPITAL ASSETS AS THEY ARE SITUATED OUTSIDE THE PRESCRIBED LIMITS. ITA NO. 2736/ MUM/ 2013 3 HOWEVER, HE NOTICED THAT THE ASSES SEE HAS PURCHASED AND SOLD THE LANDS WITHIN SHORT PERIOD OF SIX MONTHS TO ONE YEAR. HENCE HE PROCEEDED TO EXAMINE THE ISSUE FROM THE ANGLE AS TO WHETHER THE SAME CONSTITUTES THE AGRICULTURAL ACTIVITY OR BUSINESS ACTIVITY OF THE ASSESSEE. 4. THE LD CIT(A ) REFERRED TO THE RECITALS GIVEN IN THE SPECIAL POWER OF ATTORNEY EXECUTED BY THE ASSESSEE IN FAVOUR OF SOMEONE FOR REGISTERING THE CONVEYANCE DEED, WHEREIN IT IS STATED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF PROPERTIES SUCH A S RESIDENTIAL FLATS, OFFICE PREMISES, LANDS ETC. ACCORDINGLY, THE LD CIT(A) CAME TO THE CONCLUSION THAT THE BUYING AND SELLING OF PROPERTIES HAS BEEN CARRIED OUT BY THE ASSESSEE AS PART AND PARCEL OF HIS REGULAR BUSINESS ACTIVITY. HE FURTHER NOTICED THAT THE ASSESSEE HAS NOT CARRIED OUT ANY AGRICULTURAL ACTIVITIES ON THE LAND. HE ALSO OBSERVED THAT THE ASSESSEE HAS FAILED TO CLARIFY AS TO WHY HE HAS SOLD THE SOLD WITHIN A SHORT SPAN OF TIME. HE FURTHER NOTICED THAT THE ASSESSEE HAS BEEN PURCHASING THE LA ND CONTINUOUSLY IN INSTALLMENTS . ACCORDINGLY HE CAME TO THE CONCLUSION THAT THE INTENTION OF THE ASSESSEE WAS TO TRADE IN AGRICULTURAL LAND IN ORDER TO EARN QUICK PROFITS. ACCORDINGLY HE HELD THAT THE PROFITS ARISING ON SALE OF AGRICULTURAL LAND IS REQ UIRED TO BE ASSESSED AS BUSINESS INCOME. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF DCIT VS. GOPAL RAMANARAYAN KASAT (2010)(328 ITR 556), IN WHICH THE HONBLE BOMBAY HIGH COURT HAD PLACED RELIAN CE ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF G.VENKATASWAMI NAIDU & CO. (1959)(35 ITR 594). 5. THE LD CIT(A) ALSO OBSERVED THAT A NEW CITY BY NAME LAVASA WAS DEVELOPING AND THE REAL ESTATE MARKET HAS BOOMED IN AND AROUND THAT ARE A. HE THEN REFERRED TO THE RECITALS GIVEN IN AN AGREEMENT DATED 02 - 07 - 2007 ENTERED WITH SHRI RAVI GEHI (PURCHASER), WHEREIN IT IS STATED THAT THE LAND IS CAPABLE OF BEING CONVERTED INTO NON - AGRICULTURAL LAND AND THE ITA NO. 2736/ MUM/ 2013 4 PURCHASER IS IN THE BUSINESS OF DEVELOP ING RESIDENTIAL TOWNSHIP. SOME MORE RECITALS WERE ALSO REFERRED TO BY LD CIT(A), WHEREIN THE ACTION THAT ARE GOING TO BE TAKEN BY THE BUYER TO CONVERT THE LAND FOR NON - AGRICULTURAL USE WERE DISCUSSED. BASED ON THESE RECITALS, THE LD CIT(A) FURTHER SUPPOR TED HIS VIEW THAT THE INTENTION OF THE ASSESSEE WAS TO TRADE IN LAND. HE FURTHER REITERATED THAT THE ASSESSEE SHOULD HAVE HELD THE LAND FOR A LONGER PERIOD, ENJOYED ITS INCOME FOR SOME TIME AND THEN SHOULD HAVE SOLD THE SAME AS PROFIT. HE ALSO REITERATED THAT THE ASSESSEE DID NOT CARRYON ANY AGRICULTURAL OPERATION ON THE LAND. THE CONTENTION OF THE ASSESSEE THAT CERTAIN PLOTS OF LAND WERE SHOWN AS INVESTMENTS IN THE BALANCE SHEET WAS ALSO REJECTED BY THE LD CIT(A). HE FURTHER REFERRED TO CERTAIN INSTA NCES, WHEREIN THE LANDS WERE SEEN AS HAVING BEEN SOLD PRIOR TO THE PURCHASE. HENCE, ON A CUMULATIVE CONSIDERATION OF THE FACTS PREVAILING IN THE CASE, THE LD CIT(A) CAME TO THE CONCLUSION THAT THE PROFIT ARISING ON SALE OF AGRICULTURAL LAND IS REQUIRED TO BE ASSESSED AS BUSINESS INCOME OF THE ASSESSEE. ACCORDINGLY HE ORDERED AND FURTHER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE R ECORD. WE NOTICE THAT THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE LANDS SOLD BY THE ASSESSEE ARE AGRICULTURAL LANDS AND THEY ARE SITUATED OUTSIDE THE MUNICIPAL LIMITS. HENCE THEY ARE NOT CAPITAL ASSETS WITHIN THE MEANING OF SEC. 2(14) OF THE A CT. HOWEVER, THE LD CIT(A) HAS HELD IT TO BE A BUSINESS ASSET AND ACCORDINGLY HELD THAT THE GAINS ARE TAXABLE AS BUSINESS INCOME OF THE ASSESSEE. FROM THE PERUSAL OF THE ORDERS OF LD CIT(A), WE NOTICE THAT THE LD CIT(A) HAS COME TO SUCH A CONCLUSION ON T HE FOLLOWING REASONING: - (A) T HE POWER OF ATTORNEY EXECUTED BY THE ASSESSEE STATES THAT THE ASSESSEE IS IN THE BUSINESS OF PURCHASE AND SALE OF PROPERTIES. ITA NO. 2736/ MUM/ 2013 5 (B) T HE LANDS HAVE BEEN SOLD TO A PERSON WHO PROPOSED TO USE THE SAME FOR NON - AGRICULTURAL PURPOSE S. (C) T HE ASSESSEE DID NOT CARRY ON ANY AGRICULTURAL ACTIVITY AND DID NOT GENERATE ANY AGRICULTURAL INCOME. (D) T HE LANDS HAVE BEEN SOLD WITHIN A SHORT PERIOD OF SIX MONTHS TO ONE YEAR FROM THE DATE OF PURCHASE. THE LD CIT(A) HAS ALSO OBSERVED ABO UT THE SALE OF LAND BEFORE ITS PURCHASE. THE SAME DEFINES COMMON SENSE, SINCE A PERSON CANNOT SELL SOMETHING WHICH HE CANNOT HOLD. HOWEVER, THE LD A.R HAS CLARIFIED THAT THE MOU FOR PURCHASE OF LAND WAS ENTERED INTO MUCH EARLIER TO SALE. HE ALSO CLARIFI ED THAT THE PLACE CALLED LAVASA IS SITUATED FAR AWAY FROM THE IMPUGNED AGRICULTURAL LANDS AND HENCE THE LD CIT(A) WAS NOT JUSTIFIED IN REFERRING TO THE SAME. BOTH THESE FACTUAL ASPECTS WERE NOT CONTROVERTED BY THE REVENUE. 7. THE LD CIT(A) ALSO PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF GOPAL RAMNARAYAN KASAT (SUPRA). WE NOTICE THAT, IN THE CASE OF GOPAL RAMNARAYAN KASAT, THE ASSESSEE THEREIN AGGREGATED THE LAND IN SERIES OF TRANSACTIONS OF PURCHAS E OF LANDS . IT WAS FURTHER NOTICED THAT THE SAID LANDS HAVE BEEN NOTIFIED FOR ACQUISITION BY THE GOVERNMENT AND THE COMPENSATION WAS SEEN AT A HIGHER LEVEL. T HEREFORE IT BECAME MANIFEST THAT ASSESSEE THEREIN INTENDED TO MAKE PROFITS BY RECEIVING COMPENSATION FOR ACQUI SITION OF LAND . UNDER THESE SET OF FACTS, THE HONBLE HIGH COURT REJECTED THE CONTENTIONS OF THE ASSESSEE THAT IT HAS SOLD AGRICULTURAL LANDS AND ACCORDINGLY HELD THAT THE TRANSACTIONS OF PURCHASE AND SALE OF AGRICULTURAL LANDS AMOUNTED TO 'ADVENTURE IN T HE NATURE OF TRADE', AND AS SUCH, CHARGEABLE TO INCOME - TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. HENCE THERE SHOULD NOT BE ANY DISPUTE THAT THE FACTS AND SURROUNDING CIRCUMSTANCES ITA NO. 2736/ MUM/ 2013 6 PREVAILING IN EACH CASE HAVE TO BE INDEPENDENTLY EX AMINED IN ORDER TO RESOLVE THIS KIND OF DISPUTES. 8. IN THE INSTANT CASE, NOTHING WAS BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE WAS IN POSSESSION OF SOME INFORMATION PRIOR TO ITS PURCHASE THAT THE LANDS COULD BE SOLD AT A HIGHER PRICE. HENCE, IN OUR V IEW, THE DECISION RENDERED IN THE CASE OF GOPAL RAMNARAYAN KASAT ARE DISTINGUISHABLE ON FACTS. HOWEVER, WHETHER THE RATIO OF THE SAID DECISION, VIZ., IF THE LANDS WERE PURCHASED WITH THE INTENTION OF HOLDING THEM AS CAPITAL ASSET AND ONLY WITH AN INTENT ION OF EARNING HUGE PROFITS ON THE SAID PURCHASES, THEN THE ASSESSEE CANNOT PLACE RELIANCE ON SEC. 2(14) TO CONTEND THAT THEY ARE NOT CAPITAL ASSETS, IS APPLICABLE TO THE FACTS PREVAILING IN THE INSTANT CASE NEED TO BE EXAMINED. 9. IN THE INSTANT CASE, THE LD CIT(A) HAS ACCEPTED THAT THE LANDS ARE AGRICULTURAL LANDS AND FURTHER THEY ARE SITUATED OUTSIDE THE MUNICIPAL LIMITS AND HENCE THEY SHALL NOT FALL UNDER THE DEFINITION OF CAPITAL ASSET IN TERMS OF SEC. 2(14) OF THE ACT. AS NOTICED EARLIER, THE LD CIT(A) REJECTED THE CLAIM OF THE ASSESSEE THAT THE LANDS WERE PURCHASED TO HOLD THEM AS INVESTMENTS AND NOT AS BUSINESS ASSETS FOR THE REASONS STATED ABOVE. THE FIRST REASON CITED BY THE LD CIT(A) IS THAT THE POWER OF ATTORNEY EXECUTED BY THE ASSESSEE MENTIONS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF ASSETS. AT THE TIME OF HEARING, THE LD A.R SUBMITTED THAT THE POWER OF ATTORNEY WAS PREPARED BY SOMEONE AND HE HAS USED CERTAIN STANDARD RECITALS AND HENCE THE SAME CANNOT BE DE TERMINATIVE OF THE CONDUCT OF THE ASSESSEE OR THE NATURE OF LAND. WE FIND MERIT IN THE SAID SUBMISSIONS. IT IS WELL SETTLED PROPOSITION THAT THE INTENTION OF THE ASSESSEE HAS TO BE GATHERED FROM THE CONDUCT OF THE ASSESSEE AND SURROUNDING CIRCUMSTANCES. THOUGH THE LD CIT(A) HAS PLACED RELIANCE ON THE RECITALS MADE IN THE POWER OF ATTORNEY, YET NO MATERIAL WAS BROUGHT ON ITA NO. 2736/ MUM/ 2013 7 RECORD TO SHOW THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF THE REAL ESTATE. HENCE, WE ARE OF THE VIEW THAT THE SAME CANNOT BE TAKE N AS A DETERMINATIVE FACTOR, THOUGH THE SAME CAN BE USED TO SUPPORT THE OTHER MATERIALS, IF ANY BROUGHT ON RECORD. 10. THE NEXT REASON GIVEN BY LD CIT(A) IS THAT THE LAND WAS PROPOSED TO BE USED BY THE BUYER FOR NON - AGRICULTURAL USE. WE HAVE ALREADY NO TICED THAT THE LANDS IN QUESTION ARE AGRICULTURAL LANDS AND THEY REMAINED AS AGRICULTURAL LAND AT THE TIME OF SALE OF THEM BY THE ASSESSEE. HENCE THE PROSPECTIVE USE OF THE SAME FOR NON - AGRICULTURAL PURPOSES BY THE BUYER OF THE LAND, IN OUR VIEW, CANNOT C HANGE THE CHARACTER OF LAND FROM AGRICULTURAL TO NON - AGRICULTURAL. WE NOTICE THAT THE LD CIT(A) HAS GATHERED THIS INFORMATION FROM THE CONVEYANCE DEED. HOWEVER, A CAREFUL PERUSAL WOULD SHOW THAT THE PARTIES HAVE STATED THAT THE IMPUGNED LANDS ARE CAPABLE OF BEING CONVERTED INTO NON - AGRICULTURAL LAND, MEANING THEREBY, THEY REMAINED TO BE THE AGRICULTURAL LAND AT THE TIME OF SALE. HENCE THE NATURE OF LAND AS TO WHETHER IT WAS AGRICULTURAL OR NON - AGRICULTURAL HAS TO BE SEEN FROM THE PERSPECTIVE OF THE ASSES SEE AS HELD BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. DEBBI ALEMAO (2011)(331 ITR 59). IDENTICAL VIEWS HAVE BEEN EXPRESSED IN THE FOLLOWING CASES ALSO: - (A) ITO VS. P.PRAKASAM (2014)(41 TAXMANN.COM 79)(CHENNAI TRIB) (B) TULLA VEERENDER VS. ADDL CIT (2013)(36 TAXMANN.COM 545)(HYD TRIB) (C) SMT. M. VIJAYA VS. DCIT (2014)(49 TAXMANN.COM 26)(HYD TRIB) HENCE, WE ARE OF THE VIEW THAT THIS REASONING OF LD CIT(A) FAILS. 11. THE NEXT REASONING GIVEN BY LD CIT(A) IS THAT THE ASSESSEE DID N OT CARRY ON ANY AGRICULTURAL ACTIVITY IN THE LAND. WE NOTICE THAT THIS REASONING OF LD CIT(A) IS NOT SUSTAINABLE. IN THE CASE OF ITO VS. ASHOK SHUKLA (2012)(28 TAXMANN.COM 112), THE INDORE BENCH OF TRIBUNAL HELD THAT THERE IS NO REQUIREMENT IN THE ACT TH AT ONLY SELF CULTIVATED LAND WOULD BE TREATED AS AGRICULTURAL LAND AND HENCE THE LAND SITUATED BEYOND THE PRESCRIBED ITA NO. 2736/ MUM/ 2013 8 MUNICIPAL LIMIT AND RECORDED AS AGRICULTURAL LAND IN REVENUE RECORD IS TO BE CONSIDERED AS AGRICULTURAL LAND UNTILE PROVED OTHERWISE. 12. THE HONBLE BOMBAY HIGH COURT HAS OBSERVED IN THE CASE OF CWT VS. H.V. MUNGALE (1984)(145 ITR 208) THAT THE LAND WHICH IS RECORDED AS AGRICULTURAL LAND IN THE REVENUE PAPER CANNOT BE USED FOR A NON - AGRICULTURAL PURPOSE BY THE OWNER, UNLESS THE LAND IS A LLOWED TO BE CONVERTED TO NON - AGRICULTURAL PURPOSES BY THE COLLECTOR UNDER THE PROVISIONS OF THE RELEVANT LAND REVENUE ACT OR THE LAND REVENUE CODE. IT WAS FURTHER OBSERVED THAT THIS IS A CIRCUMSTANCE WHICH MUST NECESSARILY BE TAKEN INTO ACCOUNT WHILE DET ERMINING THE CHARACTER OR THE NATURE OF LAND. 13. IN THE INSTANT CASE, IT IS AN ADMITTED FACT THAT THE LAND WAS AN AGRICULTURAL LAND. THE ABSENCE ON THE PART OF THE ASSESSEE TO CARRY ON AGRICULTURAL ACTIVITIES SHALL NOT SUPPORT THE CASE THAT THE ASSESSE E INTENDED TO HOLD THE SAME AS TRADING ASSET. FURTHER THE MUMBAI BENCH OF TRIBUNAL HAS OBSERVED IN THE CASE OF MR. VIJAY D MOTIWALA VS. ITO (ITA NO.1063/MUM/2014 DATED 26.10.2015) AS UNDER: - 5. WE HAVE NOTICED EARLIER THAT THE AO HAS CONSIDERED THE FAC T THAT THE ASSESSEE DID NOT CARRY ON ANY AGRICULTURAL ACTIVITY. IN OUR VIEW, THE ABSENCE OF AGRICULTURAL ACTIVITY CANNOT BE CONSIDERED TO BE THE SOLD GROUND TO DETERMINE THE INTENTION OF THE ASSESSEE. THE QUESTION RELATING TO PRESENCE OR ABSENCE OF AGRIC ULTURAL ACTIVITY MAY BE RELEVANT TO DETERMINE THE CHARACTER OF LAND, BUT IN OUR VIEW, THE SAME MAY NOT BE RELEVANT TO DETERMINE THE INTENTION OF THE ASSESSEE TO HOLD THE SAME AS INVESTMENT OR AS STOCK IN TRADE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE AB SENCE OF AGRICULTURAL ACTIVITY, PER SE, WILL NOT BE USEFUL TO DETERMINE THE INTENTION OF THE ASSESSEE. 14. THE NEXT REASONING GIVEN BY LD CIT(A) IS THAT THE LANDS HAVE BEEN SOLD WITHIN A SHORT PERIOD. THERE SHOULD NOT BE ANY DISPUTE THAT THE INTENTION O F THE ASSESSEE AT THE TIME OF PURCHASE OF LAND IS TO BE GATHERED FROM THE SURROUNDING CIRCUMSTANCES, OF WHICH THE SALE OF LAND WITHIN SHORT SPAN OF TIME IS ONE OF THE FACTOR, BUT THE SAME CANNOT BE CONCLUSIVE ONE. ITA NO. 2736/ MUM/ 2013 9 THE LD A.R SUBMITTED THAT THE ASSESSEE HA S HELD AND DISCLOSED THE SAME AS INVESTMENT IN ITS BOOKS OF ACCOUNT. WE HAVE EARLIER NOTICED THAT THE LD CIT(A) HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS BEEN INDULGING IN CONTINUOUS PURCHASE AND SALE OF LANDS. IN THE INSTA NT CASE, THE ASSESSEE HAS PURCHASED THE LANDS AND SOLD THEM IN TWO INSTALLMENTS . HENCE, IN OUR VIEW, THE ASSESSEE CANNOT BE HELD TO BE INDULGING IN CONTINUOUS AND REPETITIVE PURCHASE AND SALE OF LAND. FURTHER THE FOLLOWING OBSERVATIONS MADE BY HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. DHABLE, BOBDEPAROSE, KALE, LUTE AND CHOUDHARI (1993) (202 ITR 98) ARE RELEVANT: - THE CASE OF THE REVENUE MAINLY APPEARED TO BE THAT THE LAND IN QUESTION WAS NOT PURCHASED BY THE ASSESSEE FOR CARRYING ON AGRICULTURAL OPERATIONS AND THAT THERE WAS AN INTENTION OF DOING BUSINESS. HOWEVER NO MATERIAL COULD BE BROUGHT ON RECORD IN SUPPORT OF THIS STAND EXCEPT THE ALLEGATION THAT SOME OF THE MEMBERS OF THE ASSESSEE - ASSOCIATION OF PERSONS, HAD ALSO ENTERED INTO SIMILAR D EALS IN THEIR INDIVIDUAL CAPACITY AND THAT THE AND IN QUESTION WAS SOLD BY THE ASSESSEE WITHIN THREE MONTHS FROM THE DATE OF PURCHASE. THE FACT OF PURCHASE AND SALE OF THE LAND BY THE MEMBERS OF THE ASSESSEE - ASSOCIATION OF PERSONS WAS ALSO CONTRADICTED B Y THE ASSESSEE. THE TRIBUNAL DID NOT ACCEPT THE CONTENTION OF THE REVENUE IN THAT REGARD. IN THAT VIEW OF THE MATTER, THERE BEING NO FINDING IN REGARD TO THE CARRYING ON OF THE BUSINESS BY THE ASSESSEE OF SALE AND PURCHASE OF LAND AND LAND BEING STOCK IN TRADE, THE CONTENTION OF THE REVENUE THAT THE INCOME FROM SALE OF LAND AMOUNTED TO PROFITS AND GAINS OF BUSINESS COULD NOT BE SUSTAINED. AS IN THE INSTANT CASE, THERE WAS NO EVIDENCE AT ALL OF ANY TRADING ACTIVITY IN THE ISOLATED TRANSACTION OF PURCHASE AND SALE OF LAND BY THE ASSESSEE, THE TRANSACTION COULD NOT BE TREATED, WITHOUT MORE, TO BE A VENTURE IN THE NATURE OF TRADE. THE ONUS OF PROVING THAT THE LAND FORMED PART OF THE BUSINESS ASSETS OF THE ASSESSEE WAS ON THE DEPARTMENT AND IN THE ABSENCE OF ANY EVIDENCE TO THAT EFFECT THE PRESUMPTION WOULD BE THAT THE LAND WAS HELD AS A CAPITAL ASSET BY THE ASSESSEE AND THE INCOME FROM TRANSFER THEREOF WAS NOT INCOME FROM BUSINESS. ITA NO. 2736/ MUM/ 2013 10 IN THE INSTANT CASE ALSO, THE LD CIT(A) HAS NOT BROUGHT ANY MATERIAL ON REC ORD TO SUPPORT HIS VIEW AND HENCE THE PRESUMPTION SHOULD BE THAT THE ASSESSEE HAS HELD THE LANDS AS HIS CAPITAL ASSET. AT THE TIME OF HEARING, THE LD A.R SUBMITTED THAT THERE WAS COMPELLING REASONS FOR THE ASSESSEE TO SELL THE LAND WITHIN A SHORT SPAN OF TIME. IN THE WRITTEN SUBMISSIONS, THE LD A.R HAS STATED THAT THE LAND WAS IDENTIFIED TO BE A UNLUCKY LAND AND THE EVENTS THAT HAPPENED AFTER THE PURCHASE OF LAND MADE THE ASSESSEE TO BELIEVE THE SAME. HENCE THE ASSESSEE TO DECIDED TO GET RID OF THE LAND . IT WAS FURTHER STATED THAT THE PURCHASER OF THE LAND ALSO SUFFERED HUGE LOSSES THEREAFTER . ACCORDINGLY, THE ASSESSEE HAS TRIED TO SUBSTANTIATE THE REASONS FOR SELLING THE LAND IN A SHORT SPAN OF TIME. BE THAT AS IT MAY, AS OBSERVED BY THE HONBLE BOMB AY HIGH COURT, THE LD CIT(A) HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF LAND WAS TO HELD THE SAME AS STOCK IN TRADE. 15. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT TH E INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF LANDS CANNOT BE HELD TO BE HOLDING THE SAME AS STOCK IN TRADE. ACCORDINGLY, WE AGREE WITH THE CONTENTIONS OF THE LD A.R THAT THE ASSESSEE HAS HELD THE IMPUGNED AGRICULTURAL LANDS AS INVESTMENT ONLY AN D HENCE THEY CANNOT BE CATEGORIZED AS CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14) OF THE ACT. HENCE THE GAINS ARISING ON SALE OF THE SAME IS NOT LIABLE FOR TAXATION UNDER THE PROVISIONS OF THE ACT. EVEN THOUGH THE ASSESSEE HAS INITIALLY DECLARED TH E SAME AS SHORT TERM CAPITAL GAIN, YET THE SAME IS REQUIRED TO BE CORRECTED, SINCE THERE IS NO ESTOPPELS AGAINST THE LAW. 16. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO EXCLUDE THE GAINS ARISING ON SALE OF IMPUGNED LAND FROM T HE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ITA NO. 2736/ MUM/ 2013 11 17. THE OTHER GROUNDS RELATING TO CHARGING OF INTEREST AND INITIATION OF PENALTY HAS BECOME INFRUCTUOUS IN VIEW OF OUR DECISION RENDERED IN RESPECT OF THE FIRST ISSUE. 18. IN THE RESU LT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. P RONOUNCED ACCORDINGLY IN THE OPEN COURT ON 16TH DEC , 2015 . 16TH DEC , 2015 SD SD ( / SANJAY GARG ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 16TH DEC , 2015 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI